Challenges and Choices
From the First Church Board of Trustees and Finance Committee
With his eyebrow-raising $500 donation in 1856, the Reverend William G. Eliot challenged the Milwaukee Unitarian community to raise the money needed to build a new church and re-form a Unitarian congregation in Milwaukee. They rose to meet that challenge and today we benefit from the tremendous legacy of that decision.
We find ourselves at another important crossroad. Which path do we take? This is a time of great possibilities. The recent generous $500,000 McLaughlin bequest provides us with resources that could be used to greatly enhance our congregation and expand the good we are trying to do in Milwaukee and the world. However, our pledge income is not sufficient to meet our day-to-day expenses. One way to manage the gap would be to use the McLaughlin bequest. But another path is available. Can we commit to increasing our annual pledge revenue sufficiently to meet that gap? If so, some of the McLaughlin bequest can be used for something special. If we do not, it is likely the McLaughlin bequest will be used up simply supporting First Church daily operations. In sum, do we seize this opportunity, or do we kick the can down the road and deplete the bequest — and the opportunities it brings — in the process?
Here is the situation we are facing:
In 2003 we adopted our ambitious Vision 2010 strategic plan to support and enhance our growing, dynamic congregation. The power of generosity fueled the First Church community as it responded enthusiastically and generously by contributing to the special $900,000 Vision 2010 fund intended to “tide us over” until, over time, the increased pledges of our growing congregation would extend to make us self-sufficient to meet our increased expenses. We are now rapidly approaching the depletion of our Vision 2010 funds. The situation, simply stated, is this:
Although we’ve experienced an increase in pledges, total pledges have not reached levels projected by Vision 2010. As a result, our revenues do not cover our expenses. Moreover, by the end of our 2012-2013 fiscal year we will have exhausted the remaining Vision 2010 funds, which we have been using to fund the gap between revenues and expenses.
Two new revenue sources, the Scrip sales and Feast for Funds programs, have been successfully launched by dedicated members of our congregation and are expected to grow, but will not have significant impact on our finances.
The staff, Board of Trustees and others have exhaustively examined expenses, and reduced or contained them where possible.
In light of these facts, on December 20, Jean Lufburrow, Chair of First Church’s Finance Committee, presented the Board of Trustees with various high level projections of revenues and expenses over the next ten years, using different assumptions for annual increases in pledges, salary and benefits (HR) expense and other expenses (note that pledges and HR expenses represent about 75% of First Church’s total revenues and expenses). The projections also included a scenario using the $500,000 McLaughlin bequest to fund the gap between pledges and operating expenses.
This is what we learned. Assuming (i) total pledges continue to increase at average historic rates (approximately 4.5% per year), (ii) no increase in staffing, and (iii) no major capital outlays, the gap between income and expenses will continue for the foreseeable future. If the McLaughlin bequest is used to fund the gap, the full amount of the bequest will be gone in less than ten years, and we will find ourselves in the same position we find ourselves now.
But we also learned something else: If we can increase our total pledge income by 6% per year (instead of our current average annual increase of 4.5%), in six to eight years we can reach a sustainable balance between pledged revenues and expenses by using a combination of (1) higher pledge revenues, (2) the last of the Vision 2010 funds, and (3) some (but not all) of the McLaughlin bequest. Under this scenario a portion of the McLaughlin bequest would still be available for whatever new projects or plans are ultimately adopted.
From the Board’s perspective the choice is clear. The unexpected generosity of the McLaughlin bequest has presented us with a wonderful opportunity at a critical point in the life of our Society. The Board expects to hold a “Breaking Bread Building Community” (BBBC) event this spring on our strategic direction, sustainability, and possible uses for whatever portion of the McLaughlin bequest ends up being available for a special project. But first, to ensure that we have the maximum flexibility to use the bequest, whether for our greatest need or our highest calling, we need to balance our budget. That is the decision before us now. Can we meet the challenge of growing pledge revenues 6% per year for six to eight years in a row? This is a serious matter; a time for soul-searching and realistic planning.
Just as we benefit today from the inspired generosity of the Reverend Eliot over 150 years ago, so also do we have the opportunity today to make a lasting difference to our congregation and our community for generations to come. Let’s not let this opportunity slip away.
For the Finance Committee
– Jean Lufburrow, Chair
For the Board
– Elizabeth Lentini